Ukraine could finish 2012 with a 'soft landing,' Lytvytsky says

The probability of recession in 2012 is less than the chance of retaining anemic but positive growth, and there is still the possibility of finishing the year with a "soft landing," Valeriy Lytvytsky, the head of a group of advisors to the governor of the National Bank of Ukraine, has said.

"This means that the pace of GDP growth over the year could be quite low, so as not to create high inflationary pressure. At the same time, this means that it will prevent the economy entering a full-blown recession," he said in an interview with Interfax-Ukraine on Tuesday.

Lytvytsky said the slowdown in economic growth in October had not stopped. In particular, the decline in agriculture over the first ten months of 2012 accelerated to 5.1%, from 4.6% in the first nine months, that in industry - to 1.4% from 1.2%, and in construction - to 10.2% from 9.1%. Cargo turnover in the transport sector in January-October fell by 6.4%, which is better than the 7% recorded in January-September, while the growth in retail sales slowed to 15.7%, down from 16%.

According to his estimates, given these data, the rate of GDP growth over the ten months was less than 1%, which means the practical non-fulfillment of the budget GDP target of 3.9%.

"The good news is that the slowdown in production in October was lower than in September. If the trend does not develop in November-December, we could finish the year with a minimum increase of a few tenths of a percent, or about 1% given favorable conditions in December," said Lytvytsky.
He said that although trade had stunted the upward trend, it was still in double-digit terms.

"This means that in the last few months of the year the traditional invigoration of consumer activity will mean the sector keeps the role of a driver of economic activity," he said.

In his view, the positive dynamics of growth over the year could continue due to the comparative base for the fourth quarter of 2011, the processing of the new harvest, and capital investment, as is usual at the end of the year.